Shop prices fell for the fifteenth consecutive month in July to mark the deepest level of deflation since 2006.

GENERAL MERCHANDISE

Shop prices fall 1.9% in July to mark fifteenth consecutive month of deflation

6 August 2014 | by The Retail Bulletin

Shop prices fell for the fifteenth consecutive month in July to mark the deepest level of deflation since 2006.

Figures released by the British Retail Consortium and Nielsen in their monthly index show that shop prices dropped by 1.9% compared to a year earlier. The decline follows a 1.8% fall in June.

Food prices edged up 0.3%, the smallest rise ever recorded by the index, as supermarkets continued to implement deep discounts.

BRC director general Helen Dickinson said: "The lowest ever recorded food inflation will be particularly welcomed by the lowest income households who typically spend around a third of their expenditure on food. Deep and widespread discounting across the grocery sector is intensifying with prices falling almost one per cent month-on-month – another record jump. After accounting for the use of multi-buys and vouchers, food prices are falling."

Meanwhile, non-food reported deceleration in deflation of 3.3% from 3.4% in June as retailers maintained the level and depth of price cuts and promotions to drive footfall over the summer holiday period.

Dickinson added: “Against a backdrop of stable commodity markets, the stronger sterling making imports cheaper and wavering retail spending, current levels of deflation are expected to continue.

"Structural changes in retail are challenging existing business models which in many cases are squeezing margins while other costs, such as business rates, continue to rise. While we know retailers will be working hard to sustain low prices, continued support from Government will be key to maintaining a sustained recovery in the economy.”

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